Today, I want to talk about the execution and signing of estate bonds or any fiduciary bond such as a trustee bond for a supplemental needs trust, administration of an estate or a guardianship, and the problems that arise when you have more than one fiduciary. In most of these circumstances, the original bonds need to be filed with the court, each fiduciary must sign the bond, and have their signature notarized. This cannot be executed in counterparts. It’s complicated enough when you have two fiduciaries, let alone several fiduciaries. Especially if those people live in different locations, such as one in Vermont, and the other in New York. One solution is having FedEx send the original to one person and then the other to sign, having the signatures notarized.
I bring this up as something of which to be aware. If you’re in a rush, and you need to have something filed immediately, it’s good to understand what is going to be required of the client concerning the bond itself.
Another thing to look at is the liability of each fiduciary. When two or more parties are fiduciaries for an obligation, both parties are liable for one another’s actions. Some people may be unwilling or uncomfortable serving with another party.
Sometimes attorneys set up the bank account to require a joint signature on every check to limit the possibility of an improper payment. Both parties have to sign the check in order for it to be valid. That doesn’t always work that well in practice. Some banks can’t verify every joint signature. Another issue is that every time you have to pay something, you must FedEx a check to one another. That can cause a problem with not having expenses paid promptly. There is also a lot of additional administrative work and costs, like shipping and FedEx fees for the clients.
So, what happens if we add a third fiduciary? I have several matters where three fiduciaries were appointed, which adds an additional layer of complication. If one of these individuals gets sick or has other issues where they can’t serve, it’s additional work to have them removed or resign as the fiduciary. Sometimes attorneys use this as a solution when two parties are disputing each other’s appointment. Just have them both serve. It may seem like a good idea at the time, but in practice, it can be a lot more work than everybody was expecting. Additional costs and other time required to administer whatever the fiduciary obligation is, it is something of which to be aware.
Neil Pedersen
PEDERSEN & SONS SURETY BOND AGENCY, INC.
15 Maiden Lane Suite #800
New York, NY, 10038
212-227-7277
800-720-7277
neil@courtbondnow.com
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